The big picture on IP litigation in China

The Supreme People’s Court (“SPC”) recently released its White Paper on Judicial Protection of IPR, 2015 (“中国法院知识产权司法保护状况（2015）, “White Paper”), containing statistics on IP litigation in China. Significantly, the statistics also contain the first conclusive data on the operation of the specialized IP Courts in Beijing, Shanghai and Guangzhou, over a year after they started accepting cases. The lesson so far is that the specialized IP Courts have proved to be a robust enforcement avenue for both domestic and foreign IP owners, especially for complicated IP disputes and technology-related cases.

1- Number of civil IP cases up, number of administrative IP cases stable

According to the SPC’s White Paper, in 2015, the courts at various levels accepted a staggering 109,386 civil IP cases at first instance level (against a total of 123,493 IP cases), and handed down judgments in 101,324 cases.

The Chinese IP docket keeps on growing, with the 2015 IP docket almost 6% larger than the 2014 IP docket. The difference between the number of cases filed in first instance and the number of judgments handed down unfortunately also means that the backlog of IP cases before the Chinese courts continues to grow.

As to administrative IP litigation in China (primarily consisting of trademark prosecution appeals against the CTMO and TRAB), the size of the administrative IP docket went from 4,887 to a staggering 10,926 in 2015 (i.e. a 123.57% increase).

2- ‘Foreign-related’ IP cases only a fraction of Chinese IP docket

The share of “foreign-related” IP cases remains remarkably small, and keeps on shrinking: only 1,327 foreign related civil IP cases were decided in first instance in 2015, which is a decrease of 22.6% compared with the 2014 numbers. The amount of foreign related civil IP cases, as a percentage of the total amount of IP cases, has dropped from 1.9% (2013), to 1.8% (2014), to 1.2% (2015). See Chart 1.

In contrast, no less than 4,928 administrative IP cases, or about 45% of the total amount, were foreign-related cases, confirming the pre-existing trend of an outsized foreign administrative docket, and an undersized foreign civil docket.

However, this dichotomy may be partially due to the fact that the SPC categorises litigation involving the Chinese subsidiary of a foreign company as domestic IP litigation, so the total percentage of foreign-related cases (in a broad sense) may be significantly higher.

Civil cases:

Administrative cases:

3- Number of patent and unfair competition cases increases significantly

The number of patent cases has known a significant increase compared to the other types of IP cases. Specifically, the Chinese courts accepted no less than 11,607 civil patent cases at first instance level in 2015, which is a 20.3% increase compared to 2014. In addition, the courts accepted a total of 1,721 administrative patent cases at first instance level in 2015, which is a 219.29% increase compared to 2014. Most of these administrative patent cases are appeals against the Patent Review Board’s decisions. In 2015, the Chinese courts also accepted 2,181 unfair competition cases, which is also a 53.38% increase compared to 2014.

4- IP Courts cornerstone of IP litigation in China

The IP Courts in Beijing, Shanghai and Guangzhou were originally set up as a pilot-project, with the aim of improving the quality of, and professionalism and uniformity in IP litigation in China. Now over a full year into their existence, the IP Courts prove to be a cornerstone of IP litigation in China. According to statistics released by the IP Courts in April 2016, the Beijing, Shanghai and Guangzhou-based courts have so far accepted a total of 15,287 cases. The Beijing IP Court accepted a total of 8,706 cases, while the Shanghai court accepted1,641 cases and the Guangzhou court accepted 4,940 cases (see Chart 3). However, no less than 74% of the cases that were accepted by the Beijing IP Court were administrative IP cases (with trademark cases representing 61%, and patent cases representing 13% of that number). This does not come as a surprise, given the Beijing Court’s exclusive jurisdiction over appeals against decisions of the Trademark Review and Adjudication Board and the Patent Review Board.

An overview of the types of cases handled by the IP Courts can be found in the Charts below.

5- Looking towards the future

Apart from the data about the past above, there are also some exciting new initiatives and proposals that may have an impact on the efficiency of and professionalism in IP litigation in China.

To begin with, during the annual meeting of the National People’s Congress, the “lianghui/两会“, Vice-Chief Judge of the Supreme People’s Court Tao Kaiyuan called for the establishment of a central, nation-wide IP Court of Appeal, that would hear all appeals in IP cases from across the country (including appeals from the IP Courts). At present, appeals are still heard in each of the provincial Higher People’s Courts.

Moreover, the Beijing IP Court has recently introduced a channel to speed up the administrative appeal cases against trademark refusal decisions by the TRAB and CTMO. If the parties agree, cases may proceed to a summary judgment with court fees halved and a judgment handed down in 45 days.

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